Defense and Our Debts to China

The House Armed Services Committee wants to find out the cost of Treasury bills held by China and its effect on U.S. national defense.

Language in section 1255 of the 2012 Defense Authorization bill posted on Monday by Rep. Howard P. "Buck" McKeon, R-Calif., directs the Congressional Budget Office to determine and make publicly available the amount of accrued interest on U.S. debt paid to the People's Republic of China during the last five years.

That section also requires the Defense secretary, in consultation with the Director of National Intelligence, to assess the national security risks posed to the United States and its allies as a result of the debt owed China.

Not a bad idea. It's hard to buy anything made in the USA anymore -- we seem to have developed a economy that requires me to buy cheap Chinese junk that does not work very well (about six toasters over the past five years), profits from which are then used by China to buy T-bills.

This January, CNN Money, in a story headlined "China: The new landlord of the U.S.," that China held $906.8 billion in T-bills as of the end of November 2010.

That total jumped 30 per cent between November and the end of December to $1.16 trillion, CBS News reported this February.

This makes, as the bill language says, "a discussion of any options available to China for deterring United States military freedom of action in the Western Pacific as a result of its creditor status" a really good idea.